The U.S. Department of Defense (DoD) recently re-upped its long-term contract with GlobalFoundries (GF) to procure U.S.-made semiconductors for vital defense and aerospace systems, extending the partnership another 10 years.
Under the terms of the deal, GF will manufacture American-made chips for military systems used on land and in the air, sea, and space. The DoD said it could spend up to $3.1 billion over the duration of the deal for access to GF’s semiconductor technologies. This is only the latest contract GF has worked out with the DoD, highlighting the key role the foundry plays in the U.S. defense and aerospace sector.
Besides volumes production, the contract also grants companies designing chips for the U.S. military other perks, including access to GF's fabs, broad design ecosystem, libraries of intellectual property (IP), along with the ability to rapidly prototype new technologies on GF’s legacy and specialty process nodes. GF said the DoD and its partners will also gain early access to emerging technologies in development.
“This partnership provides DoD programs with ‘front-door access’ to advanced technologies in a way that is scalable and highly efficient,” said Mike Cadigan, GF’s chief government affairs officer.
More Home-Grown Chips
The alliance comes as the U.S. takes steps to reduce the nation's dependence on other parts of the world and companies located outside the U.S. for a secure supply of semiconductors. In 2022, the U.S. enacted the Chips and Science Act to allocate $52 billion in subsidies and other incentives to convince companies to erect fabs or otherwise expand their footprint stateside. The Commerce Department is overseeing the funds created by the bill, which President Biden signed into law just over a year ago.
The U.S. intends to direct $39 billion to companies looking to build semiconductor fabs in the U.S. and expand or upgrade existing plants. The remaining funds are reserved for research and development (R&D) and efforts to ease a talent shortage in the semiconductor industry. Another part of the package awards a 25% investment tax credit for purchases of fab equipment, with an estimated worth of $24 billion.
Separately, GF recently said it’s applying for subsidies through the Chips Act to expand its U.S. presence. The company said it intends to land federal grants and investment tax credits to upgrade plants used to build chips for automotive, aerospace, defense, and many other sectors. GF isn’t alone in applying for financial aid: In August, the Commerce Department said more than 460 companies are interested.
GF was likely the leading candidate to become the U.S. military’s main semiconductor foundry for the next 10 years, as it has overseen contract chip manufacturing for the DoD over the last 20 years. While it’s not pursuing process technologies as advanced as Intel’s, GF is one of the only U.S. firms capable of producing large quantities of high-end, U.S.-made chips for the defense and aerospace sectors.
It also holds prestigious Trusted Supplier Category 1A accreditation from the DoD, at its U.S. facilities. This includes “Fab 8” in Malta, N.Y., the foundry’s most advanced fab, where it’s investing $1 billion in a major expansion. That means the sites have strict security measures in place to protect sensitive information and manufacture chips with the highest levels of integrity to make sure they’re uncompromised.
The pact with the DoD comes months after GF announced plans to work with Lockheed Martin to fortify the U.S. supply chain for chips used in aerospace, defense, radar, and other mission-critical systems.